Tesla Model S axes 40 kWh battery option, surpasses sales goals

Thinking of picking up the budget Tesla Model S? Think again: the electric automaker just announced that it won't be sending its 40 kWh battery pack option into production, citing a lack of customer demand. Customers who opted for the lower range configuration will still get a car, of course, but it will be a 60 kWh machine with software restrictions on range. It sounds like a raw deal, but Tesla promises customers that the artificially limited Model S will reap unexpected benefits from the battery swap -- that is, improved acceleration and a higher top speed. All of the company's 60 kWh cars will be built with Supercharger hardware, too. Finally, the company announced that it surpassed its first quarter sales goal, having delivered 4,750 Model S vehicles on its planned 4,500. This gives it a head start on its year-end goal of delivering 20,000 cars in 2013 and presumably secures the Q1 profits it promised shareholders back in February. Curious onlookers and Department of Energy collectors can find the details after the break.

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Tesla Model S Sales Exceed Target

Profitability Guidance Amended Upward; 40 kWh Battery Cancelled

Sunday, March 31, 2013

Tesla Motors announced today that sales of its Model S vehicle exceeded the target provided in the mid-February shareholder letter. As customers who note their Model S serial number this weekend will realize, vehicle deliveries (sales) exceeded 4,750 units vs. the 4,500 unit prior outlook. As a result, Tesla is amending its Q1 guidance to full profitability, both GAAP and non-GAAP.

"I am incredibly proud of the Tesla team for their outstanding work. There have been many car startups over the past several decades, but profitability is what makes a company real. Tesla is here to stay and keep fighting for the electric car revolution," said Elon Musk, Tesla Motors co-founder and CEO. "I would also like to thank our customers for their passionate support of the company and the car. Without them, we would not be here."

Also being announced today is that the small battery option for the Model S will not enter production, due to lack of demand. Only four percent of customers chose the 40 kWh battery pack, which is not enough to justify production of that version. Customers are voting with their wallet that they want a car that gives them the freedom to travel long distances when needed.

The customers who ordered this option will instead receive the 60 kWh pack, but range will be software limited to 40 kWh. It will still have the improved acceleration and top speed of the bigger pack, so will be a better product than originally ordered, and can be upgraded to the range of the 60 kWh upon request by the original or a future owner.

Tesla is also revealing a small Easter egg today: all 60 kWh cars have been and will be built with Supercharger hardware included. Tesla is taking a slight cost risk that ultimately all customers will want to buy the Supercharger upgrade and receive unlimited, free long distance travel for life. Even for those that never drive long distances, this will improve the resale value of their car to people that do.